Elon Musk’s Twitter purchase has not gone down well with even Tesla Inc. TSLA bulls, and the unanimous opinion is the electric vehicle maker will suffer in the near term.
The Tesla Analyst: Morgan Stanley analyst Adam Jonas maintained an Overweight rating and $330 price target for Tesla shares. Last month, the analyst trimmed his price target on two occasions, taking it from $383 to $350 and then subsequently to $330.
The Tesla Thesis: Tesla shares are currently in the “throes of bearish sentiment momentum,” as investors are increasingly concerned over the potential for consumer sentiment getting hit and, in turn, impacting the company’s business in the near term, Jonas said in a recent note.
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One of the main drivers that drove Tesla shares to “tera-cap” status in recent years was the ability of investors to model the outlook for the company’s core EV and energy storage businesses, the analyst said. This confidence, according to the analyst, has been tested in recent weeks and will likely be tested through the year-end.
The analyst said sentiment could impact consumer sentiment and demand, commercial partnerships, government relationships and support, and investor sentiment and capital market participation.
Potential Tesla sentiment concerns and decelerating EV demand, particularly in China, could result in the stock testing Morgan Stanley’s $150 bear-case target before the year-end, Jonas said. The analyst expects the company to follow up on its price cuts in China in Europe as well, as Giga Berlin starts increasing its production rate to 5,000 units per week.
Tesla could also announce price cuts in the U.S. sometime in the second half of 2023, Jonas added.
He sees a “window of opportunity” opening for prospective Tesla investors.
At Morgan Stanley’s $150 bear-case price target, Tesla’s valuation will be about 12.5 times enterprise value/EBITDA and 23 times P/E on the firm’s 2025 forecast, Jonas said. This, the analyst said, is an excellent value for a self-funded, 20-30% top-line grower in top position to benefit from re-architecting the U.S. on-shore/near-shore/friend-shore renewable supply chain at scale.
Price Action: Tesla shares closed Monday’s session down 2.56% at $190.95, according to Benzinga Pro data.
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